Government Guidance for Preventing and Responding to Ransomware Attacks

April 26, 2016

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Ransomware attacks are a significant and increasing threat to organizations of all kinds. Government
agencies have recently issued guidance for preventing and responding to ransomware attacks. Organizations
should consider that guidance and take appropriate steps to prevent, and prepare to respond to, ransomware
attacks.

Ransomware

Ransomware
is malicious software that prevents access to or use of an infected information technology device or
system (an "IT Resource") or related data, and demands (typically through an on-screen warning
or other form of ransom note) that a ransom be paid (often in virtual currency or other forms of untraceable
payment) by a specified deadline to obtain a key to restore the infected IT Resource or data. There
are two basic kinds of ransomware: "locker" ransomware (which prevents use of an IT Resource by
locking the user interface) and "crypto" ransomware (which encrypts specific files or data so they
cannot be used without the required decryption key).

Ransomware is often installed on an IT Resource through fraudulent techniques, such as a deceptive
email with a malicious attachment or link (known as "phishing" or "spear- phishing"),
surreptitious downloading from an infected website (known as "drive-by downloading") or an infected
message on a social media site. Sophisticated ransomware can spread throughout a computer network (including
to data stored in cloud services) before the ransomware activates, and can install other kinds of malware
on the network.

A ransomware attack can cause significant financial loss and other harm to the victim organization,
including:
(1) temporary or permanent loss of use of IT Resources and data; (2) business disruption loss and resulting
liability to customers and business partners; (3) costs to restore infected IT Resources and data, if
possible, and to otherwise respond to the ransomware attack; and (4) harm to the organization's reputation
and relations with customers and business partners.

While most hackers profit by using or selling stolen data, ransomware criminals profit by demanding
ransom payments from organizations and individuals whose IT Resources and data are affected by the
ransomware. The primary result of a ransomware attack is business disruption and loss of use of data
to the victim organization, rather than harm resulting from unauthorized disclosure of data, but some
ransomware attacks can result in hackers obtaining access to data.

Paying a ransom is risky because the payment encourages ransomware criminals and does not guarantee
that required restoration codes will be provided or that the ransomware and other malware will be removed
from the infected IT Resource. Nevertheless, ransomware victims often chose to accept those risks and
pay the ransom to avoid the cost, delay and other adverse consequences of relying on alternative remedies
(e.g. attempting to restore infected IT Resources and data) if any are available. For those reasons,
the number and sophistication of ransomware attacks have increased over recent years and are predicted
to continue to do so.

Government Guidance

On March 31 and April 1, 2016, the Canadian Cyber Incident Response Centre ("CCIRC") and the
United States Department of Homeland Security Computer Emergency Readiness Team ("CERT") collaboratively
issued related Alerts (CIRC AL16-005 and CERT TA16-091A) that recommend various measures to
protect against ransomware attacks: technological measures (data back-ups, application whitelisting,
up-to-date operating systems and application software, up-to-date anti-virus and anti-malware software
and user restrictions based on the "least privilege" principle) and user education and training.

The Alerts discourage ransomware victims from paying a ransom. The CCIRC Alert warns:
"Paying the ransom does not guarantee the encrypted files will be released; it only guarantees that
the malicious actors receive the victim's money, and in some cases, their banking information as well.
In addition, decrypting files does not mean the malware infection itself has been removed". In contrast
to that advice, a member of the FBI's CYBER and Counterintelligence Program reportedly acknowledged
in October 2015 that the FBI often advises ransomware victims to pay the ransom.

In March 2016, the Alberta Privacy Commissioner issued an Advisory for Ransomware to provide
recommendations for preventing ransomware attacks. The Advisory recommends that organizations
ensure that they have an incident response plan that deals with ransomware, and that they educate users
about the plan. The Advisory reminds that if a ransomware attack results in unauthorized disclosure
of personal information in the organization's custody or control, then the organization might have a
statutory breach reporting obligation under the Alberta Personal Information Protection Act.
Breach reporting obligations were recently added to the Canadian federal Personal Information Protection
and Electronic Documents Act, but those provisions are not yet in force.

Comment

Organizations should prepare to respond to a ransomware attack by establishing and testing a detailed
incident response plan that will enable the organization to make important technical, business and
legal decisions in a timely manner. Those decisions may include the following:

Payment: Should the organization pay the ransom? An organization that is not capable
of successfully defending against a ransomware attack may have no choice but to pay the ransom and
hope that the ransomware criminal provides the required key to restore infected IT Resources and data.
Even if an organization is theoretically capable of successfully defending against a ransomware attack,
there might be compelling pragmatic reasons to pay the ransom.

Reporting: Should the organization report the ransomware attack? An organization
may be under a legal obligation (under statute, generally applicable common or civil law or contract)
to report a ransomware attack to law enforcement, regulators (including privacy commissioners),
insurers, affected individuals (e.g. customers) and organizations (e.g. business partners) and other
interested persons (e.g. shareholders and investors). In addition, there might be important business
reasons to give notice of a ransomware attack to certain stakeholders even if there is no legal obligation
to do so.

Remedies: Does the organization have insurance coverage for the ransomware attack,
and what are the applicable insurance policy requirements? Should the organization seek remedies
for its costs and other financial losses against culpable persons (e.g. if the ransomware infection
was caused by carelessness of a service provider)?

Organizations should obtain appropriate technical and legal advice when preparing a cyber incident response
plan and when responding to a ransomware attack.